The funding game: top tips

29/07/11

Paul Grant is founder of The Funding Game and regularly runs workshops at the British Library to help you secure the best type of capital for your business.

Here are some of his top tips to secure funding.

Write a ONE page plan

Just get it all on one page, do not spend months fine tuning an epic 100 page business plan. On that one page include your USP (Unique Selling Proposition), the problem you are solving, the size of the marketplace, business model, potential team, marketing approach, the competition, exit strategy, milestones to achieve and a very rough forecast. Take no longer than a day.

Sleep on it and review

In a day or two take a look at the one pager. Does it still look good? Follow your instincts. Review it as if you were an investor. Is it unique? Is the uniqueness sustainable and in a large enough market place? Can it make money? Do you have enough passion in the idea to make it work? So you still buy into the idea? Good. Go to the next step.

Create a hot prospect list

Make a list of potential suppliers, customers, joint ventures and even competitors. Then go out and meet as many as the list as possible. You are trying to answer five big questions. Is there a real appetite for my service or product that people are willing to pay for? What is my unique angle or edge in this market place and who can help me reach this market place faster? Where is the low hanging fruit? Where can I start generating revenue right now?

Make something happen

You may have noticed there is not even a mention yet of finding capital. Most entrepreneurs would do that in step 2 (which is why only 1% of early stage businesses are successful in raising capital). In this step you need to sell something. Just make a start. If you do not have a product, sell your consultancy or sell to a potential joint venture partner that can share key technology or a large database of customers. Just make something happen and reduce risk in the investor’s eyes.

Dust off the executive summary and refine

Perhaps 3 or 6 months have passed since you took some action and each day you are making progress, generating some small cashflow, opening up opportunities and strengthening your alliances. Go back to your one page plan and make changes from your experiences and research. Build on the exec summary to include 5 year forecasts and more depth on each point. Do not spend any more than one week. At the end of this step ask yourself, do I still want to do it? If I was an investor would I invest in this? Am I prepared to put 5-7 years of my life into this project? If you do not answer 'yes' very quickly to all 3 questions drop it and find another business or idea. If you still want to push straight onwards and upwards move to next step.

Develop your funding strategy

How fast do you want to grow? How much will you need? There are at least 20 approaches to raising capital, including angel investors, bank loan grants family and friends, vendor funding, invoice discounting, crowd sourcing... Investigate. Which ones will suit your business and goals? Often it will be a mix from a number of different approaches.

Get your tools in order

In most cases it will be a strong USP, a good team, a credible exit strategy and valuation, proof of concept (listing the actions and results you have taken to date to reduce the risk), a compelling executive summary and a polished but passionate verbal pitch. Other issues may be tying up other loose ends by making sure that the company has a sound legal structure and the accounts are all in order.

Get plenty of meetings

Give yourself 3-6 months to explore every avenue in your funding plan. Put together a CRM for each prospect and track progress. You will have days where you seem to get nowhere but every now and again a few breaks and meetings arranged. Nothing will happen until you start meeting people that have access to funding.

Perfect your pitch and offering.

Never go into a meeting without getting to know the prospect, their background, circle of influences, likes and dislikes. Practice a 5 minute pitch and keep improving it. Keep it brief, compelling and backed up with facts.

Do the deal

Don’t make a rash decision and give up too much equity or settle for high interest charges. If dealing with an angel investor always get a 'term sheet' drawn up outlining the deal. Then get the lawyers to take care of the details. (On a fixed fee basis). Above all make sure you trust and get on with any of the funding partners you have agreed to do business with.

To find out more, come to Paul Grant’s workshop, How to Fund a Start-up, on Thursday 4^th August 2011. For a 20% discount off standard £35 ticket, enter “library” when booking.